003 – Growth Loops

Let your product do the heavy lifting

How do products grow?

The thinking usually goes something like this: pour more money into paid acquisition, hire more sales people, churn out more content, etc.

That's one way to grow, but there's a problem with that strategy.

Getting more out means pouring more in – which means spending more.

It's expensive, and the growth is linear. It looks something like this:

Instead of thinking about growth through the classic AARRR funnel, Brian Balfour, former VP of Growth at Hubspot, argues that we should be thinking about growth as a loop.

The fastest growing products are better represented as a system of loops, not funnels. Loops are closed systems where the inputs through some process generates more of an output that can be reinvested in the input (source).

In other words, the greatest products don't grow because their teams run better ads, write more actionable content or hire smarter sales people.

They grow because their users become their marketing engine. They bring more people in, without the company having to spend significantly more money.

The economies of scale kick in, and the growth becomes exponential instead of linear.

The game has changed

This means that the days of building a product and only THEN marketing it are gone.

Engineers, designers and marketers need think in growth loops. They need to work together to build a product that makes it easy and frictionless for its users to bring more in.

Take Surveymonkey, for example. Here's how the growth loop plays out:

1. New users signs up

2. % of them create a survey

3. % of them send out a survey

4. % of people finish the survey and see a Surveymonkey widget inviting them to create a survey

5. % of these people create a survey

6. Repeat

Another famous example is Dropbox. Here's how they engineered (and some would say pioneered) the growth loop model to fuel their explosive growth.

1. A new user signs up for 2GB of free storage

2. % of them invite friends to get more free storage

3. % of friends sign up to Dropbox

4. Repeat

And there you have it.

Today's fastest and most successful products grow their marketing engine is built in. This is why thinking in loops early on is so powerful.

Do you know of any other products that achieved record-breaking growth thanks to growth loop tactics? I’d love to know! :)

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Cheers!

Sam 🏄‍♂️